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17 Mar 2008 : Column 655

Alan Simpson: I do agree, and I ought to say that I was the chair of a waste disposal company in Nottinghamshire that was responsible for the incinerator we have in Nottingham. At the time, we dramatically raised standards in filtering and emissions. I look back at that and think it was a half-good idea for the second half of the last century, but it is a hopeless idea for the beginning of this century. We ought not to be wasting a moment in going down that path now, when the true visionary steps take us outside such conventional boxes and into a different framework of thinking about, and delivering, sustainable energy from our own waste.

I have a confession to make. Over just this past week I have come to realise that I have become a Brownite. Unfortunately my political conversion is to the beliefs of, Lester Brown, whose book, “Plan B: Rescuing a Planet under Stress and a Civilization in Trouble”, sets out how we can transform our economy to deliver 80 per cent. carbon reductions by 2020. Achieving that, however, requires us to give industry the responsibility of being, and the incentive to become, the driver of its own transformation.

Let me illustrate how that would work with transport. It is essential to say that we require something more than a raising of the vehicle excise duty on gas-guzzling vehicles, so what would be seen as transformational? Let us say that we extended the German energy model to our own approach to vehicles. The sensible approach would be to require the industry to impose a levy of, say, £3,000 on all gas-guzzling vehicles, but which can be a transfer payment to meet the cost of hybrid, low-carbon vehicles in a given manufacturer’s own range. That way, our citizens face the prospect of a cash incentive to transfer to low-carbon impact modes of transport, rather than high-carbon, so it should be economically advantageous. For manufacturers who do not produce hybrid or low-carbon vehicles, the money should go into an industry-administered fund that pays for the retroconversion of vehicles to meet low-carbon emission standards. That way, the industry is made responsible for its own transformation.

I should point out that in 1998, the Government reached an agreement with the motor manufacturing industry that by 2008 it would have reduced carbon emissions from 190 g per kilometre to 140 g. My understanding is that there is not a cat in hell’s chance of its doing that. As someone who has been somewhat sceptical about voluntary agreements, I say, let us take this one at its word. Let us say, “Fine—there will also be a levy of £1,000 on every vehicle you sell that does not meet the 140 g per kilometre standard. You keep that money in an industry fund to pay for conversion to low-carbon vehicles.” People may say that that is somewhat draconian, but even if we wait for the oil industry’s 2015 figure, we will face an oil price crunch that will lead to a crisis in terms of the unaffordability of the conventional ways in which we have tried to move around the country. We should anticipate this, live with it and engage with it. We should move towards transformational budgetary economics, rather than adopting the “steady as you go” approach, with the notion that, hopefully, someone else will dispose of the crisis for us.

We could do exactly the same with aviation. It would be really helpful if we did not put all our eggs in the
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presumptive basket of the carbon emissions trading scheme, which is a Mickey Mouse idea at best. All the nations that have been in that scheme cheat, and so do we. At the end of the day, it is the scope for dishonesty that will sink the scheme. The truth is that it is those who act as middlemen in the financial system, and the largest polluting industries, that have really made the money out of emissions trading. Even if all the permits were auctioned, that would still prompt the question whether that money would go directly into funding behavioural changes that would transform our approach to sustainable economics. I do not think that it would.

The simpler way, to pick up on a point made by the hon. Member for Altrincham and Sale, West (Mr. Brady) in a previous debate, is to say that not all aircraft are the same in terms of their carbon emitting standards, which is absolutely true. We could classify aircraft in the same way that we classify fridges. We could say to airports, “On the basis of your last year’s journeys in and out, you will be allocated a carbon miles quota. Next year and for every year after that, that quota will reduce by 5 per cent., and it is up to you to work out how you manage the affordability and frequency of flights, the balance between long and short haul and the balance between passenger and freight. However, none of it escapes a direct and easily measurable quantum that establishes that the carbon mileage entitlement is being reduced by 5 per cent. per year. That is the way we have to go.” Indeed, we could do exactly the same with shipping. That is a measurable, rather than speculative, approach to transforming the way in which the markets operate.

My final point concerns food. One point that has emerged from the changes in oil prices in the past year is the realisation that the impact kicks in in our shopping trolleys far sooner than it does at the petrol station. We will be faced with real problems about how people can survive, not only in the eating part of everyday life but in the heating part. Henceforth, all Governments will be required to produce budgets that address their own food security needs. We must refocus on that responsibility, because of the extent to which the UK has walked away from it on a presumption that globalised food trade will always provide an answer from somewhere. Whether we put it down to climate change, peak oil or economic collapse, that ain’t gonna happen any more.

We need to relocalise our presumptions about food markets, in exactly the same way as other parts of Europe have maintained their strong, regionalised food systems. In many cases, they highlight the ecological virtue of those systems by pointing out where they lower carbon miles, reduce pollution and congestion, and strengthen the lines of food accountability from the local producer to the local consumer.

In my constituency, a quiet, unassuming man who has just taken over the catering responsibilities for the combined Nottingham University Hospitals NHS Trust has saved the hospitals at least £1 million a year just by throwing out the processed food caterers and replacing them with local food contracts. If that can be done on a simple scale locally, it can be done on a national scale. We need to do it because tomorrow’s economics will not be a continuation from today of business as usual. Ministers need to be willing to step
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up to the plate and be visionary and bold in setting out transformational programmes that will change the whole character of how we live. I know that the Secretary of State can do that; I just wish that he could get his colleagues to join him.

5.47 pm

Steve Webb (Northavon) (LD): It is always refreshing to follow the hon. Member for Nottingham, South (Alan Simpson). Of the three contributions so far, his gave us the breadth of vision to match the scale of the problem. I come to the issue relatively fresh, having been the party spokesman only since Christmas. I have been astonished by the gap between the scale of the problem, as per the rhetoric in the Budget and the scientific evidence, and the time scale and scope of the proposed measures. The Budget is a classic example of the contrast between what is actually being done and what needed to be done. My hon. Friend the Member for Twickenham (Dr. Cable) described the contrast between the “apocalyptic language” and the “minimal and deferred” changes, which summed up the situation nicely.

It is important to give the background to the Budget, as the hon. Member for East Surrey (Mr. Ainsworth) did. It is timely that the National Audit Office produced over the weekend the report that he cited, because it gives us a different take on what has been going on—a take that does not reflect terribly well on successive Governments’ approach to climate change. I think that it was the Minister for the Environment who at Thursday’s oral questions gave us the figures for carbon dioxide cuts. The figures he gave were technically correct with regard to the Kyoto definitions, but he will know that they are narrow definitions, although I fully accept that they are internationally standardised.

In response to an intervention of mine, the Secretary of State said that aviation and shipping were a footnote to the international statistics. [ Interruption. ] As he says from a sedentary position, that is where they are—they are a footnote. He knows perfectly well, as we do, that in reality they are a huge and important issue. In judging how well this country is doing on this vital issue, surely we should look for the most comprehensive measures possible, not congratulate ourselves on progress against a narrow measure that simply excludes a whole set of carbon emissions that are just as damaging as the ones in the figures. That is not just a debating point or a claim that the Government pick the figures that look best and the Opposition pick the figures that look worst. We should be concerned about the real impact of CO2 emissions, which are surely most relevantly measured against the broadest measure produced by the Office for National Statistics.

The Minister for the Environment (Mr. Phil Woolas): I do not want to take up time, but I must say in response to a point that has been made in the debate and in national newspapers that the figures I gave, as I said at oral questions, related to greenhouse gases, not specifically to CO2. The Government have always been clear about the difference.

Steve Webb: I fully accept the distinction, but given that CO2 is the largest of the greenhouse gases by a long way, the Minister will surely be as disturbed as I am by the line in the NAO report that says:

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The principal difference between the environmental accounts and the Kyoto figures is aviation and shipping. I accept there is an issue about British people overseas, but the exclusion of those factors is fundamental. On the more comprehensive definition from the Office for National Statistics, we have made no progress in 17 years, which is truly shocking. Against that backdrop, the Budget measures seem all the more timid.

There has been some discussion of what the hon. Member for East Surrey called indulgences—or the buying of credits. In a sense and at one level, the Secretary of State is right. What matters is that we get emissions down, and it could be argued that it does not matter so much where that happens, but in the long term buying credits puts off the day of transformation to the low-carbon economy that the hon. Member for Nottingham, South mentioned, while other countries make the necessary changes. If we believe that the situation is really urgent, what we do should be additional to what other countries are doing, as far as possible. We should not allow them to do it instead of us, because that just puts off the evil day.

Without the amendments in the other place, the 60 per cent. cuts proposed in the Climate Change Bill could have been entirely achieved by buying other people’s CO2 cuts. We would not have needed to cut our domestic emissions at all and we could still have satisfied the 60 per cent. target, and that is totally unacceptable.

Mr. Hurd: Do the Liberal Democrats therefore support a cap on the purchase of overseas credits, and if so what level would they put that at?

Steve Webb: I do support such a cap, and before the Bill reaches this House, I shall read the debates in the other place, in which their lordships agreed a figure of 30 per cent. I shall certainly oppose Government attempts to reverse that, but I have an open mind on whether it should be lower. The key point is that we need to lock into a low-carbon structural economy, and buying our way out simply defers that.

The other contextual point that I want to make is about the contrast between the bits and pieces—such as the plastic bags—and the fact that in almost the same week the Government encouraged expansion at Heathrow and Stansted. A whole new generation of coal-fired power plants, without carbon capture and storage, is likely to go ahead. Marginal changes are being made, but the whole thrust of policy in other areas, run by different Departments—that is a key point—is in completely the other direction. All hon. Members in their places today would probably wish more power to the Secretary of State’s elbow. We wish that he had more influence on the Government, but so often his Department nibbles around the edges and does its best, but another Department comes trampling down the track and reverses that. That has to change.

I fully accept that green taxes are only one lever among many, but they work. I wish to cite—and I do not do this very often—a very successful Conservative initiative on green taxation in the 1980s: the switch to
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unleaded petrol. Actually, that was a green subsidy, not a green tax—a differential in favour of unleaded petrol. At the start of the 1980s, who would have thought that by the end of the decade cars that ran on leaded petrol would be oddities? It did not take long to change because the incentive structure was put in place. The same could happen with the vehicle excise duty tiering that we have heard about—

Kelvin Hopkins: Another example of a transformation that took place quickly and effectively was the switch from coal gas to natural gas. If there is a will, such things can be done.

Steve Webb: That is right, and such examples expose the timidity of the 2019 goals for various measures in the Budget. If we have drive and vision, these things can be achieved much more quickly, sometimes by mandate, as with the gas switchover, and sometimes by incentives.

I take the point made by the hon. Member for East Surrey about not using the cash from the VED change—the showroom tax—for other tax cuts, but my worry is that it stops. In other words, if I am thinking of buying a gas-guzzling luxury car, even a VED of £900—as opposed to one of £400—is neither here nor there if it lasts for only one year. Why not persist with it? Given that the purchase is the critical decision, why not keep the VED at that rate for the lifetime of the vehicle? That would send a strong signal and it would encourage manufacturers to start thinking about the new cars that they put on sale. That might lead to a much quicker transformation in what is offered.

The Secretary of State was right to point to the issue of best in class. There are very fuel efficient versions of almost every vehicle, be they rural 4x4s or family cars. It is not that people cannot have big family cars or 4x4s, but we need strong incentives for them to purchase the more fuel-efficient models. The incentive at the point of purchase would be much stronger if it were not a one-off hit, which is probably quite marginal to the cost of purchase.

Mr. Redwood: The hon. Gentleman makes some interesting points. Is it Liberal Democrat policy to accept the levels that the Government propose but to make them annual, or does he think that the levels should also be raised?

Steve Webb: We certainly think that the increased VED should continue: it should not be a one-off hit. We also think that green tax, as broadly defined, should represent a significantly bigger share of the total tax take. As the hon. Member for East Surrey said, that should not be part of an overall tax increase, and green taxes should be used to cut other taxes. We have identified the standard rate of income tax that lower and middle earners pay.

This Budget takes the green tax share to 2.8 per cent. Ten years ago, it was 3.6 per cent. The share of green taxes has therefore fallen by about a third in 10 years. The proposed taxes are by no means swingeing new green taxes: they will not even fractionally reverse the decline in the past 10 years. Given that we have to raise
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a certain amount in taxation, surely it is common sense to raise that on pollution and the marginal choices that increase carbon emissions, rather than on income and the things that we want people to do. The present balance is wrong, and I do not understand why the Government do not address that. I take the point made by the hon. Member for Nottingham, South that the risk is that the Government will totally discredit the notion of green taxation, which is one of the key levers we have at our disposal.

How much green taxation was in the Budget? The Institute for Fiscal Studies says that by 2010 additional green taxation will be £1.8 billion a year. In the context of Treasury estimates of revenue, that is a rounding error. The Chancellor routinely revises his income and expenditure figures by far more than that every six months. The idea that the Budget contained some huge tax switch that will transform our battle against climate change is nonsense, and in his heart of hearts the Secretary of State knows that. The scale of what is proposed is simply not up to the scale of the problem.

We have heard of the endless deferral—to 2019—on new buildings. The schools programme has a target of 2016. The Department for Children, Schools and Families is rebuilding schools up and down the land, so for another eight years new schools, which will presumably stand the test of time for decades, will be built to inadequate standards, locking in sub-standard carbon performance. That should be dramatically improved—and quickly.

We have heard already about the small scale of the green homes service—£1 per household. The Secretary of State used to hold the same position at the Department for International Development. The British Government will clearly contribute worldwide to attempts to deal with the consequences of climate change, and we know that many of the poorest countries will be the first to suffer. Does he therefore share my view, and that of the leader of the Liberal Democrats, that our spending on alleviating the consequences of climate change should be additional to the 0.7 per cent. target and should not eat into it? Surely it would be a double penalty on the world’s poorest people to say, “Actually, we were planning to spend money on clean water, education, disease protection and all those things, but we are not going to spend as much on them. Our actions of decades past are ruining your natural environment, so we will take a bit of the money that we were going to use to try to stop your children dying before the age of five to make sure that your earth doesn’t flood.” Surely, if 0.7 per cent. of GDP was a proper target for the humanitarian and infrastructure work that needs to be done anyway, the climate change mitigation work that we will do overseas should be additional. I hope that the Minister who responds to the debate will give us the Government’s position on that.

I want to say a few things about the energy efficiency and fuel poverty aspects of the Budget. I intervened on the Secretary of State and queried some of the cuts in his departmental budget. Obviously, when it comes to energy efficiency, we have another example of that, which is the freeze on the Warm Front programme. The people who perform the home installations reckon that compared with the previous three-year period they will soon be able to do fewer houses. The cost is going up and the budget has been frozen in cash terms.

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Warm Front is a highly impressive, highly effective programme. It is not without its flaws, but it is an excellent scheme. I am therefore concerned that cuts have been made. When we ask Ministers about that, they cite other schemes and initiatives, such as the carbon emissions reduction target—CERT—but that is not an adequate substitute. It is not as good, for a number of reasons. For example, it rewards a company for saving carbon emissions among its customers. However, a company gets a better return from saving carbon emissions for a big, wealthy customer with high carbon emissions than it does for a small consumer—perhaps a single pensioner living on their own. In other words, for a given amount of insulation, companies get more return by going for, in some cases, the more prosperous.

I know that there are minimum quotas, but they have gone down, too. I understand that the number who have to be in the target groups has gone from 50 to 40 per cent. and that the target groups have been broadened, which is crazy. We want the priority to be the fuel poor. The Government know who the fuel poor are, broadly defined—they certainly know who receives means-tested benefits. Companies in the CERT programme do not know which of their customers are on means-tested benefits, so they have to spend time, effort and money finding out or speculating about that, when the Department for Work and Pensions knows.

I hope that the Secretary of State’s Department— [ Interruption. ] The Minister for the Environment says it is because of data protection. I quite understand that the Department for Work and Pensions cannot simply hand over benefit details, but why, for example, could not every recipient of pension credit receive a certificate, once a year, with their annual uprating statement? They used to get certificated housing benefit, entitling them to a rent rebate and to have their council tax paid. Why should they not receive a certificate of eligibility for Warm Front or CERT, or for whatever scheme happens to be running, that they take to their supplier? The supplier would not have to know which benefit they were on or what their income was. No databases would have to change hands. It is a relatively simple idea. The mailing is going out anyway. I am reassured that the Secretary of State is reaching for his fountain pen, and if it happens, I am happy to share the glory with him.

Hilary Benn: It is a felt tip.

Steve Webb: That will do.

Martin Horwood (Cheltenham) (LD): In fact, there is a precedent for a very simple system: the charitable gift aid process. Donors make a declaration based on their knowledge of their tax status without revealing their tax details to the charities. It works very well.

Steve Webb: I am grateful to my hon. Friend. There is probably a variety of ways of doing it, of which that is one. My central point is that expecting the fuel companies to try to identify their poor customers, when the Government already know—when one bit of government wants it done but another will not give that information—does not seem to be joined-up government.

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